15 vs 30 YR Mortgage Calculator

When selecting a loan out of the dozens of variations on a mortgage that are popular in the current market, it is immensely helpful for the borrower to be able to view an actual timeline of what the payment schedule will look like. Borrowers must choose between loans of different amounts and associated interest rates, different styles – adjusted rate or fixed rate, for example, various brokerage firms, and varying term lengths. Besides interest rate, the life length of the loan is perhaps the most important variable when it comes to picking out the loan that is most suitable to you and your financial future. Most importantly, you as the borrower will want to be sure you are contracting a loan that you can live with, as most loans will end up outliving cars, computers, and even the family pet.

What is the Length of a Loan?

Typically, real estate mortgages begin at the home closing wherein the buyer, seller and the real estate agent exchange cash and contracts, and end after they are fully amortized anywhere from 10 to 30 or even 40 years later. The term time all depends on how much you can afford to pay towards your monthly mortgage bill, how often, and for how long. Longer term loans – in the 20-40 year range – are for those who can afford smaller payments and who may refinance the loan or consolidate multiple mortgages at some point in the process in order to free up cash or benefit from a better interest rate.

Shorter term loans, however, are for those who want to, and are financially able to, front a larger amount of cash each month for the mortgage in order to reduce the interest and principal back down to zero in as little time as possible, anywhere from 10-20 years. For fixed rate loans, where the interest rate stays the same despite any fluctuations of the lender's market, typical term lengths are 15 or 30 years.

How to Compare Term Lengths

Borrowers will find it much easier to compare the advantages and disadvantages of a shorter or longer term mortgage once they plug their unique statistics into a calculator like this one. With just the sum of your monthly principal and interest payment as well as your anticipated annual interest rate (this could be the effective interest rate if you have an adjusted rate mortgage), you can view the picture of your debt at 10 years and 30 years as well as the 5 year increments in between. The tool divides your results between principal and interest payments, the sum of the two (which is your total monthly bill), and the expected amount of total payments.

The figure of total payments made will be equal to the number of months that you can expect to pay the mortgage bill (120 months for a 10 year loan, for example) multiplied by the monthly payment due. When most of the interest is paid off after the first few years, and the principal is fully paid off during the remainder of the term, the loan will be amortized and considered terminated. Borrowers should be sure to compare the monthly payment of the various lengths of loan terms before they commit to a broker and decide what percentage of their monthly salary they can practically afford to devote to the mortgage payment.